Investment Planning
Process
As in all we do, the investment planning process starts with you – your assets and resources, your goals and dreams. As a component of a comprehensive planning process, we come to understand how your investment goals fit into your bigger financial picture. The process entails an assessment of your risk tolerance, liquidity needs, time horizon, and income taxes, with individual objectives such as retirement, college education funding, legacy gifts or other specific goals each having their own parameters.
Principles
Our analysis, and ultimately our recommendations, are based upon principles of portfolio design and management, which include:
- Combining non-correlated assets can reduce portfolio risk and enhance portfolio return. An “efficient portfolio” is one that optimizes the risk-return trade-off for an investor.
- Reducing income taxation by careful consideration of asset location – qualified retirement plans versus taxable accounts, use of tax-favored investments, employing tax conscious managers and “tax-loss harvesting”, can enhance portfolio returns.
- Expense management is important – portfolio returns can be enhanced by reducing portfolio expenses.
- Market timing destroys value – a steady, long-term approach is key to successful investing.
- As asset class performance alters the original portfolio allocation, systematic portfolio re-balancing can enhance returns over time.
- While the core of your portfolio may consist of traditional stocks and bonds, “alternative asset classes” such as real estate, managed futures, “market-neutral strategies” and others may be appropriate.
- Considerations such as environmental, social and governance, otherwise known as ESG, can be an important part of portfolio design and on-going management and is also addressed in our process.
Investment Policy Statement
Just as institutional portfolios such as pension plans and charitable endowments are guided by a statement of investment policy, we believe yours should be as well. An outcome of our planning process will be the creation of a customized Investment Policy Statement for your portfolio as well as for family entities such as an irrevocable family trust, a charitable trust or private foundation.
Implementation
Once we’ve agreed upon the design of your portfolio, the next step is to implement our recommendations. Guided by the Investment Policy Statement, we can create a customized portfolio for you, providing on-going management. And you’ll get clear performance reporting. We can even provide consolidated statements reflecting assets held at other financial institutions.
Questions to ponder:
- Have you had an analysis performed of your investment portfolio, to include such aspects as:
- Performance relative to appropriate benchmarks?
- Risk-return efficiency?
- Income tax efficiency?
We will analyze your investment portfolio considering these and other criteria. We will then make recommendations that can result in potentially enhanced returns and reduced risk. Take the first step towards a more confident future: contact us today at advice@sagemarkpws.com.